Tilburg, May 19th , 2019
The recovered paper market is not really doing well, especially as far as occ (kls) is concerned. All efforts to produce ‘ China-quality’ in Europe seem to have been wasted now that prices for occ in the U.S. are going ever lower. Well, of course there is still occ moving to China but a decent compensation in price for the extra sorting can’t be achieved anymore. This hurts especially in the U.K. where the Recycling Association had arranged together with CCIC UK a sort of self-certification system for companies to invest in production and shipment of the right quality (max. 0.5% contamination). Despite the much lower net purchase prices in the U.K, after the PERN has been deducted, there is a growing oversupply of card board. Obviously Chinese buyers rather buy it in the U.S. where shippers absorb the 25% import tax which has sent the price of occ to historical lows. Where American economists keep on stating that consumers eventually will have to pay the import tax on Chinese goods, this is at least not the case in the opposite way. The supplier always has to suffer, whether it is import tax or a suddenly occurred currency disadvantage, if you want to export you have to compete on the market with other parties who do not have that disadvantage, as it is always a matter of price. In the situation that specific import taxes are implemented for specific countries, often goods are shifted and supplies come in through other countries, with possible shortages supplemented by other non-taxed countries. It will cost a bit more, but that will be it. With the commodity recovered paper it is more complicated, surely in a worldwide oversupply situation as we have now. The British recovered paper sector has different opinions about it. Good quality will always sell and with upcoming new capacities the problem will solve itself automatically in the next 18 months or so, is the general idea. Although there is seldom reason to be pessimistic in our sector, the reality could be slightly different this time. Indeed, in the years ahead significant new capacities of corrugated paper will be added. And surely recovered paper will be needed for those capacities but eventually the finished paper will have to be sold as well. That is not easy already today, so how will this develop when so much extra capacity will be built ? With the hype of the last few years in the packaging sector the end result was that about 3% more paper annually has been sold. With continuous upgrading and adjustment of existing machines quickly a few percent of extra production capacity is added anyway. A flood of new capacities by converting graphic paper machines and also complete new machines is just too much. With on top a complete ban of recovered paper imports into China by the end of next year, you wonder where we are going to find outlets for our recovered paper. This question has come up already many times over the last 50 years so it is not exactly new either. The degrading of the market is not limited to kls (occ) only, by the way. Prices are just going down further, for all grades and everywhere.
Price indications in Europe for low grades of recovered paper, sorted, baled and ex-works are now between € 50 and € 150 per ton. These prices are depending on quality, available volume, region and loaded weight.
Click here for the price chart, with prices of the last 10 years.
The price chart gives an indication of the price of mixed paper in the Netherlands free delivered mill over the last years. Scrolling over the top of the colums gives the exact price indication in Euro's per ton.
To view the price chart completely, please click and hold on the price chart after opening and move cursor to left or right to see all available years/months.
In 2018 imported volumes of recovered paper in China went down 33.8% compared to 2017. In 2017 and 2016 also imported volumes went lower already compared to previous years with 9.8% and 2.7% respectively. The drop in 2018 could have been much worse if imports in the last Quarter would not have been increased by 34% compared to the same period of 2017. This was probably due to the active use of the yet available import licenses. And, the average price of imported recovered paper went up by $ 20 per ton compared to 2017. Next to mixed paper, that was not imported at all anymore, imports of all other grades dropped as well, like corrugated and kraft grades -14%, deinking grades -31% and high grades -17.1%. Furthermore it worked out that only Japan and other Asian countries last year exported more volumes to China, +9.8% = 244.000 tons and + 39.6% = 520.000 tons respectively. Against that, imports from the U.S.A. (-45.5%) and Europe (-38.1%) went down significantly. Imports from all other regions went down as well.